This week’s trade in the oil market may witness bottoming action take place, as the U.S. election begins to move to center stage. There may also be an exit from the markets by hedge funds that close their books on Oct 31st, but the impact they actually exert may be somewhat limited in the near-term as their long positioning has already been reduced.
The oil market stabilized its short-term selloff yesterday and rebounded slightly, but evidence is unclear as to whether a bottom has been formed. The action was not typical of a bottom, as volumes appeared to be light and fresh economic data was mixed.
Cotton Ginnings ISSN: 1948-9021 Released October 25, 2012, by the National Agricultural Statistics Service (NASS), Agricultural Statistics Board, United States Department of Agriculture (USDA). Running Bales Ginned by Crop – States and United States: October 15, 2009-2012 [Excluding linters. Blank cells indicate estimation period has not yet begun]
The overnight markets have continued where yesterday left off with gains being posted in nearly every market. The grain market seem to be gaining some interest again as the equity markets have lost nearly 4% in the past week, this lowers the overall bench market of returns for the year and gives some more runway to trade and place risk back on knowing that the equity benchmark is now up 11% rather than 15%.
The oil market may continue its short-term correction in the near-term, but it’s also entering a support range between
$81.00 and $85.00/bbl. We think that the rate of decline will slow in the near-term, as some of the impulsive selling and weak longs exited the market during Monday’s session.
Not sure if it’s the fact that Obama won the debate last night or the fact that earnings continue to fall below expectations but it appears that the market is quickly moving back to a risk off environment moving back to capital preservation mode.
Breaking News – Crude Oil Inventories
Natural Gas traded higher settling $3.535 up $0.083 2.6%. The curve was firmer, 13/16 $0.02 better. Hub cash was stronger, ~$0.12 back this morning, Z-6 down $0.10 to $3.50. The 12z was in line w/ overnight models, showing mostly cooler temps Eastern U.S. during the 6-10 day (Northern Plains came in slightly warmer).
Oil prices may continue their short-term correction over the next few days, with support in WTI offered between $81.00 and $85.00/bbl. We think that the rate of decline will slow in the near-term, as some of the impulsive selling and weak longs have exited the market. A focus will be on the FOMC announcement today, but little change in policy is expected after the last meeting’s implementation of QE3.
It’s hard to believe that the markets are actually now higher on the week by nearly 35 cents in beans and 10 cents in corn after the week had started. The overnight markets are attempting to sustain the gains of yesterday. The overnight news that spiked the wheat markets higher is based on the fact that Ukraine announced they will ban wheat exports starting on November 15th, there is still a lack of clarity if this affects the sales on the books that are scheduled to ship after the 15th or just preventing any further sales.
